Is the single window part of your global trade vision in 2013? I hope your answer is, “Yes—the transition to the single window is on my ‘trends to watch list,’ as are export reform, electronic communication with customs and other government agencies (OGA), and the introduction of new Korean free-trade agreements.”
Customs and OGA’s certify electronic filing interfaces and certified software providers must keep the interfaces up to date. This cycle of certification and re-certification is an ongoing exercise to keep up with the modernization of customs and their systems.
In this post, I’ll review the complexities giving rise to the need to incorporate single window into our global trade strategy. Let’s look at some of the drivers from an export then import perspective.
Why We Need Single Window: The Complexities of Export Control
As an example, there are two separate export control lists containing products, technology, and materials that are maintained by separate agencies in the U.S.:
- Commerce Control List maintained by the Department of Commerce Bureau of Industry and Security, which covers products that have civilian applications but can be transformed to weapons—most prevalent in the chemical, pharmaceuticals, Industrial Machinery and Components IM&C, and consumer products
- United States Munitions List maintained by the Department of State, which consists of military and weapons products that are subject to International Trade and Arms Regulations (ITAR)—critical to the aerospace, defense, and high-tech industries
To further complicate things, in the U.S., export licenses are issued by three different groups (the Departments of State, Commerce, and Treasury), and the requirements are based on two different sets of regulations administered by two different departments: Export Administration Regulations (EAR) and ITAR.
Modernization of the global supply chain means investment in systems and technology. The National Export Initiative in the U. S. calls for the consolidation of the current export controls and Harmonized System HS codes. The interfaces for customs, as well as other government agencies, are being unified into one, single window for export, OGA requirements, and import.
Who is driving the adoption of the single window? Organizations worldwide (including Latin America and Mexico), such as:
- United Nations Economic Commission for Europe
- Centre for Trade Facilitation and Electronic Business
- World Customs Organization
- Association of South East Asian Nations
- United States Automated Commercial Environment
Other global trade trends to watch include product classification. New classification schemes are including export regulations directly into the number schema. The idea is to build as much intelligence in the new schema to cover all global trade, customs, and other government agency requirements.
Why We Need Single Window: The Complexities of Imports
Importing is a very precise process that requires an accurate product classification to avoid customs delays and ensure the correct application of duty rates. The filing of imports requires multiple steps and special procedures depending on the product and its originating country. To speed up the process, pre-entry documents are filed before the actual import entry.
Filing the actual import entry includes:
- Customs valuation of tariff rates
- Entry process selection
- Entry filing
- Post-entry validation
- Import reconciliation in cases where actual quantities or tariffs weren’t exact
Further complicating the import process is the variety of ways you can pay for duties. Products can be imported:
- Directly into free circulation (entered for consumption)
- Into a bonded warehouse where duties are only paid when the product’s pulled from the warehouse
- Into a bonded warehouse with duties already paid
- Into special manufacturing processes where duties are deferred or recalculated
- Via the transit procedure, as in Europe, where tariff duties are suspended until the goods reach the final destination
There’s a lot of work involved for the customer in importing products. Traditionally, this function was outsourced to import brokers who handled everything. However, the larger importers are finding that with automation, they can do the work themselves, thereby:
- Reducing costly brokerage fees
- Giving the importer more control over the flow of goods
- Providing more flexibility as tariffs change or new programs, such as free trade agreements, come on line
The value proposition for import is targeted to the high-volume importers, and the process itself is one of the most crucial and difficult bottlenecks of the supply chain. It’s the mechanism for providing other government agencies, such as the Food and Drug Administration (FDA), with required regulatory information prior to the goods entering into the U.S. It’s also a major security concern. Recently the Importer Security Filing regulation was enacted. Known as ISF or 10+2, the regulation requires the declaration of goods in containers 24 hours prior to container loading—adding more requirements to importers who use vessel containers (bulk items such as grain or liquids are exempt). ISF requires ten data elements from the importer plus two from the carrier, hence the term 10+2.
The Single Window Solution
All the critical and complex aspects of the import process are driving the single window or Automated Commercial Environment (ACE) in the U.S. The idea is to simplify importing and provide one system and interface to file all documents. Ideally, companies will select a solution that connects to the government systems and connects Customs (CBP), the trade community, and participating government agencies by providing a single, centralized, online access point for communications of all required information.
The single window’s expanding, and companies should begin planning now by becoming familiar with all their requirements and by watching the market for solution providers that can get them there fast.
Single window isn’t just a government mandate— it’s a solution that increases user productivity through simplification and automation. Rather than resisting this innovation, companies should embrace the single window and jump out in front of their competition.
How’s your company planning for the single window?